Southstate Bank Corporation · NYSE:SSB
Southstate Bank — South State — Stephens Bank CEO Forum 2019
41 slides from Southstate Bank's conference presentation, Sep 23, 2019
Slide 1: Investor Presentation, Stephens Bank CEO Forum
InvestorPresentation Stephens Bank CEO Forum September 24, 2019
Slide 2: Forward Looking Statements
ForwardLookingStatements Statements included in this communication, which are not historical in nature are intended to be, and are hereby identified as, forward looking statements for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Slide 3: South State Corporation: SSB
South State Corporation: SSB Richmond Raleigh Greenville Charlotte Columbia Wilmington Atlanta Myrtle Beach Augusta Charleston Savannah Recent/Announced Closure New Branch 3
Slide 4: How We Operate the Company
How We Operate the Company Growth Profitability Soundness 4
Slide 5: 2Q Highlights
2Q 19 Highlights GAAP Adjusted* Net Income $41.46 $49.40 (millions) EPS $1.17 $1.40 Return on Average Assets 1.08% 1.28% Return on Average Tangible Equity 13.38 15.79 Efficiency Ratio 66.87 59.78 5 *Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger rel
Slide 6: Longer-term Targets
Longer-term Targets 8 - 9% 30 - 35% 6 ROTCE 16 - 18% Loan Growth 5 - 10% Expense Growth 0 - 3% Efficiency Ratio 56 - 57% Capital TCE / TADividend Payout Range
Slide 7: Soundness
Soundness
Slide 8: Capital Adequacy
Capital Adequacy 13.1% 12.6% Tangible Common Equity / Tangible Assets Leverage Ratio CET1 Ratio Tier 1 Capital Ratio Total RBC Ratio SSB (6/30/19) 8 11.6% 10.0% 9.0%
Slide 9: Asset Quality
Asset Quality NPLs / Loans(1) NPAs / Assets(2) 0.63% 1.02% 0.26% 0.23% 0.23% 2014 2015 2016 2017 2018 2Q 19 2014 2015 2016 2017 2018 2Q 19 ALLL / NPLs(3) NCOs / Average Loans(4) 343.4% 340.9% 0.16% 2014 2015 2016 2017 2018 2Q 19 2014 2015 2016 2017 2018 2Q 19 1) NPLs / Loans includes Acquired and No
Slide 10: CRE Concentration
CRE Concentration 2Q 19 % Regulatory Balance Guideline Balance ofRBC* % of RBC* CRE $3.4 227% $4.5 300% Construction $1.0 65% $1.5 100% Land & Development 10 Dollars in billions * Concentration limits calculated based upon bank level total Risk Based Capital (RBC). $1.6 Billion in CRE Lending Capaci
Slide 11: 2Q 19 Funding
2Q 19Funding Interest Bearing Savings $1,340 Non-Interest Bearing DDA $3,256 Money Market $2,763 Other Borrowings $1,118 Time Deposits $1,735 11 Dollars in millions
Slide 12: Profitability
Profitability
Slide 13: Earnings Per Diluted Share
Earnings Per Diluted Share $5.50 $4.31 $4.18 $4.11 2015 2016 2017 2018 YTD 2019 EPS Adjusted* EPS (Non-GAAP) 13 * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses, deferred tax asset revaluation, and FD
Slide 14: Net Interest Margin
Net InterestMargin $129.6 $128.3 $126.4 $127.2 $123.3 $118.0 $116.5 $115.9 $115.6 $114.1 4.14% 4.04% 3.98% 3.92% 3.82% 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 Net Interest Margin NII - Excluding Accretion Net Interest Income 14 Dollars in millions
Slide 15: Revenue Composition
Revenue Composition Other 12% Trust & Investment Services 22% Noninterest Income $67.4 Million Deposit Accounts 54% Mortgage Banking 12% 2014 20152016 2017 2018 YTD 2019 Noninterest Income Net Interest Income 15 Excludes Securities Gains/Losses. 25% 26% 28% 25% 22% 21% 78% 79% 75% 74% 75% 72%
Slide 16: Efficiency Ratio
Efficiency Ratio 66.9% 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 Efficiency Ratio Adjusted* Efficiency Ratio 16 * Adjusted is a Non-GAAP financial measure that excludes the impact of branch consolidation, merger related expenses, and securities gains or losses. 65.6% 59.8% 62.3%63.2% 62.5% 57.3% 59.5%59.4% 59.4
Slide 17: Common Stock Dividends
Common Stock Dividends $1.38 $1.32 2013 2014 2015 2016 2017 2018 YTD 2019 3Q 19 Dividend Declared* Dividend per Common Share 17 CAGR Calculated based on 1Q 13 dividend of $0.18 to 2Q 19 dividend of $0.40. * 3Q 19 dividend of $0.43 declared 7/25/2019 with a record date of 8/9/19 and paid on 8/16/19.
Slide 18: Tangible Book Value + Cumulative Dividends
Tangible Book Value + Cumulative Dividends $ 60.00 50.00 40.00 30.00 20.00 $14.43 $12.38 10.00 - 2005 2006 2007 2008 2009 2010 TBV 2011 2012 2013 2014 2015 2016 2017 2018 2Q19 Cumulative Dividend 18 Cumulative Dividends begin January 1, 2006. $49.82 $47.49 $31.89 $23.49 15 year increase of 303%
Slide 19: Growth
Growth
Slide 20: Market Demographics
Market Demographics Population Growth 2019 - 2024 MSA Branches Myrtle Beach 10 2.7x Charleston 24 Hilton Head 9 Raleigh 1 Charlotte 22 Wilmington 4 Greenville 14 Savannah 7 Columbia 9 National Average 3.56% Augusta 12 Nation Richmond 8 Nation 20 Source: S&P Global Market Intelligence. 2.3 2.3 2.3 2.
Slide 21: SSB Footprint Market Share
SSBFootprint MarketShare Rank 1 Institution Wells Fargo & Co. Deposits $ 38.4 Market Share 19.3% BB&T Corp. 2 3 37.9 27.4 19.1 13.8 Bank of America Corp. First Citizens BancShares Inc. 4 12.8 6.4 6 United Community Banks, Inc. 4.9 2.5 7 Toronto-Dominion Bank 4.9 2.5 8 Synovus Financial Corp. 4.6 2.3
Slide 22: Selected Markets
Selected Markets Charleston Branches 24 Charlotte Branches 80 Deposits $ 3,335 2,302 Share 22.7% 15.7 Deposits $ 9,984 8,630 8,089 3,303 2,700 Share 23.4% 20.2 18.9 7.7 6.3 1 Wells Fargo & Co. (CA) 1 2 3 4 5 Wells Fargo & Co. (CA) 2 Bank of America Corp. (NC) 15 Bank of America Corp. (NC) BB&T Corp.
Slide 23: BBT / STI Branch Overlap
BBT / STI Branch Overlap South State 23 Source: S&P Global Market Intelligence as of 12/31/2018. Percentage overlap of BBT / STI branches within a 2 mile radius of each other. Savannah 86% Charleston 70% Greenville 79% Charlotte 50% Raleigh 59% Richmond 63%
Slide 24: Economic Highlights
Economic Highlights Richmond Raleigh Greenville Charlotte Columbia Wilmington Atlanta Myrtle Beach Augusta Charleston Savannah 24
Slide 25: Appendix
Appendix
Slide 26: Appendix Contents
Appendix Contents Share Repurchase Activity 27 Average Interest Earning Assets 28 Accretable Yield 29 Loan Portfolio 30 – 33 Investment Portfolio 34 Deposits 35 Lines of Business 36 – 38 26
Slide 27: Share Repurchase Activity
Share Repurchase Activity • $66.58 per share average • $73.13 per share average • $75.08 per share average • $72.32 per share average 27 1Q19 •500,000 shares •$33.3 million 2Q19 •641,200 shares •$46.9 million 3Q19 •858,800 shares purchased through 9/6/2019 •$64.4 million 2019 Total •2,000,000 shares
Slide 28: Average Interest Earning Assets
Average Interest Earning Assets % of Earning Assets 1.9% % of Earning Assets 4.5% Assets Short-Term Investments 1Q 19 2Q 19 Change $ 249 $ 602 $ 353 Investment Securities 11.9 1,515 12.1 1,621 106 Loans – Acquired 23.0 2,947 20.1 2,695 (252) Loans – Non-acquired 63.1 8,076 63.1 8,463 387 Loans 86.1
Slide 29: Accretable Yield
Accretable Yield 20% 15% 10% 6.1% 5% 2Q15 4Q15 2Q16 4Q16 2Q17 4Q17 2Q18 4Q18 2Q19 Accretion / Total Interest Income Contractual Interest $ 7.1 27.7 Total Yield* 12.02% 5.48 6.54% Total Income $13.0 30.9 Contractual Yield* 5.76% 4.85 5.01% Income Statement Accretion $5.9 3.2 Acquired Credit Impaired
Slide 30: Acquired Loan Portfolio
AcquiredLoanPortfolio As of June 30, 2019 Carrying Value $419.9 2,180.3 Accretable Yield / Disc Acquired Loans UPB $473.7 2,207.1 Discount Credit Impaired Non-Credit Impaired Total ($53.8) (26.8) $100.6 26.8 (A) (B) $ 2,680.8 ($80.6) $ 2,600.2 $127.4 (A) Represents total loan discount made up of $13
Slide 31: Loan Portfolio Mix
Loan PortfolioMix $11,221 $11,013 $10,619 2014 2015 2016 2017 2018 2Q 19 Non Acquired Acquired* 31 Dollars in millions *Acquired loans are net of discounts. $2,600 $3,080 $6,680 $4,127 $8,621 $7,933 $6,004 $5,716 $1,439 $6,492 $1,783 $2,248 $5,241 $4,221 $3,468
Slide 32: 2Q 19 Loan Characteristics
2Q 19Loan Characteristics Floaters $2,347 21% Fixed $6,215 56% Hybrid ARMs $2,515 22% Adjustable $94 1% 32 Dollars in millions Excludes Non-Accrual loans Maturity or Repricing <1 year 29% 1 - 5 years 35 5+ years 36 Overall Weighted Average Life of 3-4 Years
Slide 33: 2Q Loans
2Q 19 Loans Loans by State (Billions) Loans by Type VA $0.6 NC $2.0 GA $2.2 Other $0.4 Commercial 32.8% Consumer 37.3% mercial Real Estate 29.9% SC $6.0 33 Average Loan Size $12390,26315 Top 25 7.32% of Total loans Non-acquired Charge-offs 0.02% NPAs/Assets 0.26% Non-acquired Loan Growth 3% Annualiz
Slide 34: 2Q Investment Portfolio
2Q 19 Investment Portfolio Composition State & Municipal AFS Fixed Income Portfolio (AFS & HTM) Agency Mortgage-Backed Securities 70% Tax Equivalent Yield Weighted Average Life Effective Duration 2.8% 4.2 years 3.8 Total Carrying Value $1.7 Billion SBA U.S. Agency/GSE Debentures 5% 34 Fair value for
Slide 35: 2Q Transaction Deposits
2Q 19 Transaction Deposits Dollar Balance (billions) # of Accounts Non-interest Checking Interest Checking Card Transactions 35 Annual ~109 million DDA & Loan New Accounts ~9% Digital Mobile App ~200,000 users Online Banking ~271,000 users Avg. Balance $12,900 Avg. Age 10 Years Debit Consumer Digita
Slide 36: Wealth
Wealth Assets Under Management or Care (millions) Noninterest Income (thousands) 2014 2014 2015 2015 2016 2016 2017 2017 $5,511 $25,401 2018 2018 ,943 $30,229 YTD 2019 2Q 19 $5,340 36 $18,344 $20,117 $19,764 $14,989 $3,828 $3,933 $4,170 $4
Slide 37: Mortgage Banking
Mortgage Banking Production (millions) Noninterest Income (thousands) 2014 2014 $16,170 2015 $1,379 2015 $21,761 2016 2016 404 $20,547 2017 2017 $1,577 $17,954 2018 2018 $1,514 YTD 2019 YTD 2019 37 $13,590 $7,692 $1,195 $1, $769
Slide 38: Branch Network
BranchNetwork Total Branches Acquired De Novo 12/31/2009 48 201 1 (94) Consolidated or sold Total Branches 6/30/2019 Branches closed in 3Q 2019 Branch total as of 8/31/2019 157 (1) 156 Average deposits 6/30/2009 6/30/2019 per branch $ 46 76 38 Dollars in millions Average deposits per branch based on
Slide 39: Analyst Coverage
AnalystCoverage Janney Montgomery Scott Keefe, Bruyette & Woods Sandler O’Neill Stephens SunTrust Robinson Humphrey 39
Slide 40: Investor Contacts
InvestorContacts Robert R. Hill, Jr. Chief Executive Officer John C. Pollok Senior Executive Vice President Chief Financial Officer James C. Mabry IV Executive Vice President Investor Relations and Mergers & Acquisitions 520 Gervais Street Columbia, South Carolina 29201 (800) 277-2175 www.SouthState
Slide 41: South State
S$ . SOUTH STATE